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Key divorce deductions are going away soon

Under the new tax laws recently passed in congress, couples who choose to divorce in 2018 could see major changes that affect multiple areas of a divorce negotiation. Most notably, divorces that involve some form of spousal support must now contend with new tax obligations for the paying spouse. To make matters more complicated, these changes take affect on January 1, 2019, meaning that divorces completed within 2018 may favor one party differently than those completed after these rules activate.

The main issue at stake is a change in the way that spousal support is taxed. Both parties may see an increase in taxation, but the paying spouse also loses an important deduction. After January 1, 2019, spouses paying spousal support may no longer deduct spousal support payments from their personal tax returns.

For many years, this key deduction allowed those who paid spousal support some small comfort in knowing they could enjoy some silver lining for those out of pocket expenses come tax season. Now, under the new tax rules, these protections are not longer in place. As couples work out what is fair in a spousal support arrangement, they must also consider this lost deduction. Ultimately, this shuffle in exemptions leaves less wiggle room for spouses to negotiate other aspects of a settlement.

If you and your spouse face divorce, be sure that you understand your rights under the law, as well as how these new tax law changes may affect you and you divorce goals. It is generally wise to consult with an experienced attorney who understands your needs and can help guide you through this difficult process on your way to fresh start on the other side of divorce.

Source: Yahoo Finance, "Trump's tax bill will make 2018 a wild year for divorce," Ethan Wolff-Mann, Jan. 10, 2018

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Law Offices of Indu Srivastav, APLC
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